Acute lymphoblastic leukemia (ALL) is the most common form of cancer in childhood. At present 70-80% of children can be cured, but are at risk for late complications of therapy, including second cancers and permanent developmental or neurological impairment. Understanding the molecular pathogenesis of this disease may permit the development of more targeted, and possibly, less toxic therapies. Up to a third of the cases of childhood leukemia are associated with a t(12;21) reciprocal chromosomal translocation giving rise to a novel fusion protein (TEL-AML1). The fusion protein is derived from two transcription factors (TEL and AML1) each of which plays essential roles in normal hematopoiesis. TEL-AML1 expression alone is not sufficient for malignant transformation. Studies reveal that the translocation may be present at birth, preceding overt leukemia by up to 14 years. The additional molecular events required for transformation have not been defined. Very common, however, is loss of the second non-translocated (normal) TEL allele in leukemic cells, suggesting an evolution of the leukemia in which not only the TEL-AML1 hybrid protein, but also loss of TEL function, contributes to the molecular pathogenesis. Testing this two step pathogenesis of childhood leukemia in genetic mouse models is highly challenging because each of the presumed genetic events interferes with embryonic development. To circumvent these obstacles, engineered mouse strains, allowing conditional expression of TEL-AML1 and conditional inactivation of TEL both in vivo and ex vivo, have been generated using the Cre/loxP recombination system. The specific aims are: (I) to determine if recreation and expression of TEL-AML1 fusion in the bone marrow in vivo arrests B-cell differentiation and predisposes to leukemia; (II) to test the two step hypothesis of pathogenesis of childhood leukemia in the mouse bone marrow in vivo by expression of TEL-AML1 in the presence and absence of TEL; (III) to analyze the consequences of TEL-AML1 expression in the absence and presence of TEL in proB-cells ex vivo; (IV) to identify genes regulated by TEL-AML1 and TEL in proB-cells using microarray technology.